Australian Catholic University (ACU) vice-chancellor Peter Sheehan has warned that any move by the Archdiocese of Sydney to increase the rent it pays the archdiocese for its two Sydney campuses could force him to cut staff or raise student fees.

Professor Sheehan's warning is reported today in the Australian Financial Review. It follows discussion of the issue last week on ABC Radio's Religion Report.

ACU pays a peppercorn rental of $10 a year for the two campuses in North Sydney and Strathfield, but the Archdiocese has received valuations commissioned for the two properties from property consultant Colliers. The valuation is not public but would be in the millions of dollars, meaning that a commercial rent would amount to hundreds of thousands of dollars a year.

Professor Sheehan said that if the ACU was forced to pay a substantial commercial rent he would have to make hard decisions, including staff redundancies or raising higher education contribution scheme fees, to ensure the university stayed financially viable.

"I've always fought fervently against the idea of redundancies - they are so against the spirit of our ethos and mission, and we have always rejected higher fees on equity grounds, yet [if we have to pay a market rent] we will need to review our finances if we are to survive," he said.

The lease arrangement between the university and the archdiocese has a clause for rental review, which would allow the rent to be increased to a commercial rate.